By the numbers: price on our headcount

By the numbers: price on our headcount

Summary: Senator Conroy's parliamentary inquiry into software pricing is on a hiding to nothing.


Senator Conroy's parliamentary inquiry into software pricing is on a hiding to nothing. Small countries will always pay more, and we're actually doing better than some.

There's no doubt that we're at a big disadvantage over those in the US when it comes to buying software. We highlighted this a year ago when Adobe launched its Creative Suite 5.5. Now, with the pricing released for Creative Suite 6, we can see that the problem still exists.

Microsoft is another big offender. The downloadable edition of Microsoft Office Home and Business edition (for two machines) is 42 per cent higher than in the US (at current exchange rates). In Microsoft's defence, countries like Australia (with one tenth of the US population) will sell far fewer products, and the company must still deal with marketing and support costs.

So, does this mean that the smaller the country, the higher the price for software? For the most part, the answer is yes. (Brazil seems to be the exception, but it is considered to be a developing economy.) Germany, a country with a quarter of the population of the US, pays 80 per cent more than those in Microsoft's homeland. Australia, with just 7 per cent of the US population, gets away with paying only 42 per cent more. (So maybe we should keep quiet?)

(Credit: Phil Dobbie/ZDNet Australia)

The truth is that Microsoft, like any company, will charge what it can get away with. What vendor wouldn't weigh things up by asking, "What will make more: selling fewer units at a premium price, or selling more at a lower price?"

There's nothing that Stephen Conroy's parliamentary inquiry can do to stop this from happening. It's a fundamental of business, and the repercussions of the government sticking its nose in and taking on some sort of regulatory control is frightening to all businesses, irrespective of their sector.

We should remember that higher pricing in Australia doesn't just relate to software. We pay more for most things — cars, petrol, clothes, toys. Shipping costs might be an element, but it's mostly to do with market size. Perhaps the conclusion from Conroy's inquiry will be that we should fix the pricing issue through a forced breeding program and a huge increase in our migration intake. That should do it.

Topics: Software, Government AU


Phil Dobbie has a wealth of radio and business experience. He started his career in commercial radio in the UK and, since coming to Australia in 1991, has held senior marketing and management roles with Telstra, OzEmail, the British Tourist Authority and other telecommunications, media, travel and advertising businesses.

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  • Phil Dobbie: I ask you about computer games brought via Steam - take for example Quake 2 - you pay USD9.99 for it in Australia and USD7.99 if you’re in the US. Do we pay an extra $2 per unit because Zeni Max need to employee staff to support it; do we need to pay that extra $2 because John C needs to finish his next patch? No - Quake 2 is open source, and is no longer looked at by the original authors in terms of support - why are we paying extra on a game that in your examples is more expensive because of the support costs?
  • You are exactly right in saying that companies charge more because they can - because Aussies keep bending over. Of course, for business purposes some may have little choice but to cough up but as for me I continue my boycott of Technet until MS delivers parity pricing. However, after 2 years of non-subscription I'm finding its not really impacting on me that much anyway so perhap I wouldnt bother re-subscribing anyway.
    • I bought my last Technet subscription direct from one of the USA's best known online retailers - at half the price charged here.
  • Phil Dobbie: just one question for you - does ZDNet "Australia" pay Microsoft local software pricing for product being used in Oz - I bet not? They would be purchased on their "enterprise agreement" at the US prices! Come on get real!
  • I dunno Phil, I checked for the April 1 backdate to this article but it appears that there is no correlation, so I will just put the whole thing down to satire. We are small, they are big, live with it... a bit like Poland might have felt in the late 1930's... a crass correlation perhaps, but if the principle fits...
  • They can charge what they want for versions with AU localisation (ha!) and AU in-business-hours support; what I object to is being prevented from buying the US version from their US branch, paying my GST if it's above $1000, and getting on with using it. Adobe's support has been spectacularly useless the few times I've needed it so I don't want it anyway, and Microsoft charges you for support as an extra on top.

    At least Germany gets localised versions, though I doubt they get the choice of saying "stuff it, I don't care and just want to be able to buy the US version". Localisation for Australia is somewhere between hilariously easy and not worth bothering about, so I don't buy that as a justification for costs here. Sure, for an accounting package or something with complex local rules & laws I'd buy it, but an office suite?

    I recently went to buy an X-Rite i1Pro spectrophotometer (the "i1Basic" variant). This cost over twice the US price for the same hardware, and a credit card and shipping address restriction prevented me from buying the US one directly. The local exclusive dealer argued that they must charge a premium because of the service and support they offer - then admitted that (a) phone support is done by X-Rite call centers; (b) servicing is done by shipping the unit to X-Rite in the US with a minimum 4-week turnaround, and (c) they don't offer loan units, on-site service and diagnostics, or anything much else. As far as I can tell they charge a premium because X-Rite thinks dealing with the big scary Rest Of The World That Isn't The USA is too hard, so they sign up exclusive dealers to do that icky hard stuff.

    The best thing? The upgrade to the i1Photo or i1Print was purely a software upgrade with the exact same hardware, but it still had the same gigantic markup. The software isn't even different, the upgrade just writes a little key to the EEPROM on the i1Pro that tells the software to enable more features. For this, US residents pay about US$1000, we pay over US$2000.

    Support costs, my ****
  • BTW, I now use a US proxy service and US remailer when I can. I haven't worked out a US credit card yet (I don't have one of their social security numbers) but I'll get there.

    The really sad thing is that even when ordering from a US site to deliver to AU, it's often cheaper to ship via a US remailer than pay the site's immensely padded "the rest of the world is too hard" shipping charges.

    Some of this garbage isn't just US vendors' faults, though. We can't just buy TV shows, music, etc from the producer in the country that made it because of the insane regional licensing bodies and deals that live on as pre-Internet dinosaurs. The UK's BBC can't offer paid international streaming by subscription because of rebroadcast deals with satellite & cable TV providers on a region-by-region basis, and because individual shows are often sold to free to air ad-supported stations. Until that stops, they can't start selling subscriptions, and they can't afford to stop the regional licensing until they're making enough from the subscriptions they can't sell yet. Similar issues exist for music, where orgs like ARIA and AFACT have regional rights to international artists' work through their labels, preventing those artists or the labels from selling directly to AU.

    Of course, it's often convenient to preserve many of these geographic licensing arrangements because it provides market segmentation, allowing you to charge what the market will bear for each region.
  • @Ringer: You dont need a US credit card. Get an Aussie one EXPRESSly[1] for this, when it arrives, ask them to set the billing address to your remailer. Of course, you should set up to get online statements, or you'll get overdue fees when your snailmail doesn't arrive. In some cases, you'll need an anonymous proxy based in the USA as well.

    [1] that's a hint for a company that will do this, but you have to be clear what you want when talking to them.